Assume that a lender has $175,000 available to lend at a rate of 4.5% per annum, compounded semi- annually. The lender is willing to amortize repayment of the funds over 25 years with monthly payments, but will limit the loan term to 5 years. If a mortgage broker charges the lender 1.5% of the face value of the loan to find a qualified borrower for these funds, what yield, expressed as an annual rate, compounded semi-annually, would the lender actually earn over the term of the loan? (1) 4.458386% (2) 4.141720 % (3) 4.864939% (4) 4.924108%

Assume that a lender has $175,000 available to lend at a rate of 4.5% per annum, compounded semi- annually. The lender is willing to amortize repayment of the funds over 25 years with monthly payments, but will limit the loan term to 5 years. If a mortgage broker charges the lender 1.5% of the face value of the loan to find a qualified borrower for these funds, what yield, expressed as an annual rate, compounded semi-annually, would the lender actually earn over the term of the loan? (1) 4.458386% (2) 4.141720 % (3) 4.864939% (4) 4.924108%

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

See similar textbooks

Similar questions

If Bergen Air Systems takes out a $100,000 loan, with eight equal principal payments due over the next eight years, how much will be accounted for as a current portion of a noncurrent note payable each year?
Calculating interest and APR of installment loan. Assuming that interest is the only finance charge, how much interest would be paid on a 5,000 installment loan to be repaid in 36 monthly installments of 166.10? What is the APR on this loan?
Suppose a borrower makes a $100,000 loan with annual payments at a 10 percent rate and a 10-year term. The loan is fully amortizing; however, payments are made on an annual basis to simplify the initial illustration. How the annual loan payment is calculated?
Given the following information about a fully amortized loan, calculate the lender’s yield (rounded to the nearest tenth of a percent) if the loan were to be paid off in 4 years. Loan amount: $568,000 Term: 30 years Interest rate: 8.23 % Monthly Payment: $4,259 Discount points: 1.5 3rd Party Costs: $7,500 8.60% 7.80% 8.70% 8.50%
22. 1). You are going to buy a home, and will be taking out a home loan for $275,000. The loan will be a standard 30 year loan, compounded monthly, with an APR of 7.9% a). Calculate the uniform payment series for the loan. b). Construct an amortization table that separates payments into interest and principle portions. c). If you pay an additional $150 per payment period for the first 4 years of the loan, what will the new payoff date be.
You plan to borrow $25,000 at a 3.4% annual interest rate compounded annually. The terms require you to amortize the loan with 5 equal payments each made at the end of each year. You would like to construct an amortization schedule showing details of the payments. Answer the following questions, and choose the closest answer from the possible choices following each question: 1.To find the interest repaid in period 1 only in the financial calculator amortization worksheet, you enter P2 = 2.To find the interest repaid in period 1 only in the financial calculator amortization worksheet, you enter P1 = 3.How much total interest is repaid in periods 1 to 2?
Suppose you borrow $2,000 from a bank for one year at a stated annual interest rate of 14 percent, with interest prepaid (a discounted loan). Also, assume that the bank requires you to maintain a compensating balance equal to 20 percent of the initial loan value What effective annual interest rate are yo being charged
Assume you are purchasing an income-producing property for $10,000,000. The estimated NOI in the next year is $600,000. A lender is willing to provide a mortgage with an annual interest rate of 4.0%. Payments will be made monthly based on a 30-year amortization schedule. The lender requires a minimum debt coverage ratio of 1.25. Based on this required minimum debt coverage ratio, what is the largest loan the lender is willing to make (rounded to the nearest dollar)? Assume the lender will not allow the loan to exceed 85% of the acquisition price under any circumstances. $8,500,000 O $8,478,000 O None of the selections is within a $2 of the correct answer O $8,378,450 O $13,964,083
assume a $175,000 mortgage loan and 10-year term. The lender is charging an annual interest rate of 6 percent and 4 discount points at origination. a. What is the monthly payment Assuming that it is based on an amortization period of 30 years? b. What will be the required balloon payment at the end of the tenth year? c. What is the effective borrowing cost on the loan if it is held to maturity? Give typing answer with explanation and conclusion
1. Let's assume that a loan of $100,000 with an annual interest rate of 6% over 30 years pays monthly payments of $500. a. Calculate the accumulation rate b. Calculate the payment rate . c. Answer : How will the balance of the principal be at the end of the loan in relation to the original amount of the loan? Less, equal or greater? Provide calculations.
Assume a $175,000 mortgage loan and 10-year term. However, monthly payments will be based on a 30-year amortization schedule. The lender is charging an annual interest rate of 6 percent. Total up-front financing costs, including payments to third parties, equal 4 percent of the loan amount. Required: a. What is the monthly payment? b. What will be the required balloon payment at the end of the 10th year? c. What is the effective borrowing cost on the loan if it is held to maturity? Complete this question by entering your answers in the tabs below. Required A Required B Required C What is the monthly payment? Note: Round your answer to 2 decimal places. Monthly payment S 1,049.37 X